Benchmarks continue to trade in green in noon session

Maintaining most of their initial gains, Indian equity benchmarks continued to trade in green in noon session as investors turned optimistic after much softer-than-expected inflation data fuelled hopes of a rate cut by the central bank at its next policy review in August. Data released late on Monday showed consumer inflation easing to 2.18% in May, helped by a drop in food prices - the lowest since India started publishing an economy-wide consumer price index in 2012. Adding optimism among investors, Union Finance Minister Arun Jaitley said on Monday that the Reserve Bank of India (RBI) was at a fairly advanced stage of preparing a list of borrowers from whom non-performing assets (NPAs) of public sector banks could be recovered under the Insolvency and Bankruptcy Code. The move would help beleaguered public sector banks (PSBs) recover part of their NPAs, estimated at over Rs 6 lakh crore. However, gains remained capped with Industrial production growth slipping to 3.1% in April compared to the same period last year, when industrial production grew by 6.5%.

On the global front, Asian markets were trading mostly lower on Tuesday as investors took a cautiously optimistic stance ahead of a U.S. Federal Reserve policy meeting that could provide cue on the pace of rate hikes in the months to come. The positive sentiments across the region was also supported by oil prices, which edged up in early trade, following statements that OPEC leader Saudi Arabia was making significant supply cuts to customers. However, the Japanese market edged lower following the weak cues overnight from Wall Street and a stronger yen.

Back home, stocks from Realty, Basic Materials and Capital Goods counters were supporting the markets’ uptrend, while those from IT, Teck and FMCG counters were adding to the underlying cautious undertone. In scrip specific development, Power Finance Corporation (PFC) gained after the company received the government approval for issuing bonds, redeemable after three years and eligible for exemption from capital gains tax. Furthermore, Sun Pharma surged after the company received USFDA approval for generic Zetia tablets, which has market size of $2.7 billion in US.

The market breadth remained optimistic, as there were 1448 shares on the gaining side against 857 shares on the losing side, while 151 shares remained unchanged.

The BSE Sensex is currently trading at 31182.79, up by 87.09 points or 0.28% after trading in a range of 31075.80 and 31200.31. There were 19 stocks advancing against 10 stocks declining on the index, while one stock remained unchanged.

The broader indices were trading in green; the BSE Mid cap index was up by 0.51%, while Small cap index up by 0.77%.

The top gaining sectoral indices on the BSE were Realty up by 0.83%, Basic Materials up by 0.70%, Capital Goods up by 0.62%, Utilities up by 0.60% and Power up by 0.59%, while IT down by 0.66%, TECK down by 0.52% and FMCG down by 0.03% were the few losing indices on BSE.

The top gainers on the Sensex were HDFC up by 1.83%, Lupin up by 1.49%, Sun Pharma up by 1.28%, NTPC up by 1.04% and Tata Steel up by 0.84%. On the flip side, Wipro down by 0.95%, Tata Motors down by 0.91%, Infosys down by 0.84%, TCS down by 0.70% and ITC down by 0.44% were the top losers.

Meanwhile, in order to help banks tackle the menace of mounting bad loans, the government and the Reserve Bank of India (RBI) have indicated that they will step up efforts to clean-up banks balance sheets which are saddled with huge non-performing assets (NPAs), including through the National Infrastructure Investment Fund (NIIF). NIIF, which was like an asset management company, may take over some of the stalled projects and nurture them back to health.

Earlier, the government had toyed with the idea of setting up a special fund to tackle the issue of stressed assets as part of the NIIF, but had opted against it, fearing that it may be seen to be bailing out companies. Also, finance minister Arun Jaitley said that the RBI was finalizing a future course of action for some large defaulters, including initiating action under the Insolvency and Bankruptcy Code (IBC).

Jaitley has stated that under the new ordinance issued, the RBI is at a fairly advanced stage of preparing a list of borrowers where NPA resolution is required under the insolvency law and action on this front is expected soon. He also said that there are already about 81 cases filed under the IBC and 18 cases out of these have been initiated by financial creditors. RBI deputy governor S S Mundhra further added that internal advisory committee had been constituted by the RBI for identifying accounts to be actively considered for resolution.

The CNX Nifty is currently trading at 9634.75, up by 18.35 points or 0.19% after trading in a range of 9614.10 and 9646.75. There were 31 stocks advancing against 19 stocks declining on the index, while one stock remained unchanged.

The top gainers on Nifty were ACC up by 1.70%, Bank of Baroda up by 1.61%, Bosch up by 1.59%, Sun Pharma up by 1.59% and HDFC up by 1.55%. On the flip side, Tech Mahindra down by 1.41%, Wipro down by 1.23%, Tata Motors - DVR down by 1.11%, HCL Tech down by 0.94% and Tata Motors down by 0.91% were the top losers.

Asian markets were trading mostly in green; Jakarta Composite rose 0.08%, Shanghai Composite gained 0.28%, KOSPI Index increased 0.62%, Taiwan Weighted added 0.29% and Hang Seng was up by 0.42%.

On the flip side, Nikkei 225 was down by 0.07%.